Delinquency rates drop for commercial mortgages in Q3

Commercial mortgage delinquencies fell in the third quarter.

The level of commercial and multifamily mortgage delinquencies declined during the third quarter, which kept the levels relatively low across many categories.

Delinquencies of 60 or more days for loans held by life insurance portfolios declined to 0.12 percent, which was 0.03 percentage points lower than the previous figure, the Mortgage Bankers Association explained. This was also far lower than the historical delinquency height, which was 7.53 percent, recorded in 1992.

The level of delinquent loans insured by Freddie Mac did not change from the previous quarter, as the figure was 0.27 percent, the association's Commercial/Multifamily Delinquency Report explained. Property management companies also witnessed the delinquent loans insured by Fannie Mae fall to 0.28 percent.

Delinquent loans insured by Fannie Mae had a historical high level of 3.62 percent in 1991, the report explained. The current level is 3.34 percentage points lower than that figure. Freddie Mac's historical high was 6.81 percent, while the third quarter's level was 6.54 percentage points lower.

Commercial mortgage-backed securities experienced a delinquency rate of 8.86 percent, which was 0.11 percentage points lower than the previous quarter, the report noted.  This was 0.16 percentage points lower than the highest-ever level, which was 9.02 percent last year.

"Commercial and multifamily mortgage delinquency rates for loans held by life companies, Fannie Mae and Freddie Mac all remain extremely low," said Jamie Woodwell, vice president of commercial real estate research for MBA. "The delinquency rate on bank-held loans is at its lowest level since the beginning of 2009 and the delinquency rate for loans held in commercial mortgage-backed securities – while still elevated – continues to stabilize. If one removes the CMBS loans that are in foreclosure or REO, that delinquency rate is at its lowest since late 2009."

CMBS delinquencies still struggle to improve
While the MBA noted that CMBS delinquencies dropped, another report noted that this level increased later in the year. According to Trepp's November 2012 CMBS Delinquency Report, the figure rose to 9.71 percent, which was two basis points higher than the previous quarter. However, this followed three months of declines, where the level dropped 65 basis points.

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